Reading all the articles about the future of housing construction and the number of new modular factories being built, it would certainly appear modular will be the way to build future new housing.
In all honesty, it is! But there is a small, and growing smaller, segment of the modular housing industry that is beginning to lose its appeal for almost every modular factory… building the true custom home.
Almost every new modular factory built in the last 2-3 years produces multi-family townhouses, condominiums, workforce housing and affordable housing projects exclusively. Custom isn’t even on their radar. Over the past 2 years, several legacy modular home factories in the East have closed up shop because neither of them was able to sell the factory to anyone, not even the builders that were buying custom homes from them.
So, what is the problem with a factory building a custom modular home?
The answer to that falls directly on the word “Custom.” There are not as many single-family custom home builders in the US as there were 10 years ago. Historically, most custom home builders are onsite builders who control the entire building process at the jobsite. Everything from excavation to foundation to framing, MEP, drywall and finish was done on the jobsite.
The modular home custom builder can be found mainly on the East Coast. 10 years ago, they could buy a custom modular home from more than 20 modular factories that had sales reps on the road and working the phone to get more custom homes to build. Today many factories don’t even have one sales rep for custom homes that go after single family home builders. The factories have either decided to move over to project sales or continue to only work with their legacy builder and not pursue new ones.
There are very few new single family home builders coming onto the market replacing the ones that have retired or passed away.
Now we have a situation where modular factories need sales to keep production lines full and with a sharply diminishing number of custom home builders, what can a factory do? Many factories have begun turning to developers building multifamily housing to keep their lines full.
Instead of the factory purchasing departments trying to source special order “one-off” items for a custom home during a time of supply chain shortages, they can source 50 or more of one item for a developer that isn’t as demanding as the modular builder’s customer.
There are a few modular home builders that have switched to offsite panels and trusses instead of going modular as they have found lead times for modular factories can be as long as a year.
The target of modular construction for the future is the developer who simply wants a good product delivered on time, at the price quoted and with relatively few problems. This sounds like something modular construction can handle quite easily.
There is a bright side to the custom modular home market though. The factories that choose to build custom modular homes to their builder’s requirements can slow down, take time to do superior quality work, get fewer callbacks and charge more for their homes. Look for some enterprising investors to begin building modular factories to do just that. Maybe some legacy factories, which can do all those things a new custom modular factory will do, will step up and fill that market. The industry’s old-time craftsmanship might once again return and entice new builders to go modular. Now that would be quite the sight!
The fate of custom modular single-family homes is on the line and if both new and legacy modular factories don’t begin to look at profit instead of quantity, custom will continue to disappear from modular production lines.
Gary Fleisher is the Editor in Chief of Modular Home Source and Offsite Builder. Email at [email protected]
Gary Fleisher, Editor in Chief of Offsite Construction Magazine
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